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Too much credit card debt? There is a way out! Call Toll Free: Protecting Yourself From Check Fraud There is a little known means of creating and processing checks from your account that opens the door to theft from your checking account. With little more than your checking account and bank routing number criminals can draft money from your account without ever leaving home. Some companies’ whole business centers on making it easy for consumers to send or email check payments. Customers sign up to have their checks printed and mailed or emailed through the service by registering a checking account on the site. One such company, Qchex’s, only requirement is a valid email address as a form of identification. No other attempt is made to verify the check writer’s identity much less if the account belongs to the registrant. The Demand-Draft Dilemma The reason the system works so well in favor of the criminal is a little-known thing called demand drafts. Most people assume their checks must be signed by an authorized account holder to be valid. With checks presented in person that would be true, but in the case of demand drafts that changes. These drafts look just like checks, but place a "signature not required" or a similar message in the authorized signature area. Banks usually cash them just like valid, signed checks. These demand drafts were developed to accommodate legitimate telemarketers who receive authorization from consumers to take money out of their checking accounts. But as consumers and authorities are finding out, the potential for abuse is high. Generation of a demand draft does not require any action on the part of the account holder. All that a thief needs to clean out your account is the account number and bank routing number — information found on every single check. Because of the surge in fraud via demand drafts, also known as "remotely created checks," have become such an attractive target for criminals, the Federal Reserve proposed a new set of rules to govern them. The National Association of Attorneys General wanted to place a ban on them altogether because of the increased fraud. The idea of a criminal being able to access a person’s bank account without their knowledge or permission constitutes gross negligence on the part of the services that provide demand drafts without proof of identity. Banks are upset that the new rules would place the burden of authenticity on them. This would give customers rights similar to those found under the Electronic Funds Transfer Act (EFTA). In this case consumers could request a quick response to the report of fraudulent activity on their accounts. Debt Fraud Defense In order to issue a demand draft the criminal needs two things – your checking and bank routing number. There are various ways they can entice you to give up that information. The first is to tell someone that they would like to make payment by direct deposit. Another way to get the information is to write a check on a different Qchex account and send it to another person or organization followed by a letter explaining that the payment was a mistake and asking for repayment of the over payment. Then there is the really easy way to obtain checking account information – sifting the trash. The best thing is to protect yourself before hand to prevent theft of your hard earned money. Be sure you don’t give out your account numbers to individuals or organizations that you can’t confirm are legitimate. If someone claims to have overpaid you and is seeking a refund perhaps it would be best to have that claim investigated, or at least use a money order if you are moved to make the refund. Before disposing of copies of checks, bank statements or any other sensitive information, run it through a shredder to ensure it does not fall into the wrong hands. In addition to preventing the theft, be sure to scrutinize your bank statement each month to make sure there have not been unauthorized debits or drafts. If you find anything amiss be sure to report it to the bank immediately. In one study in at a community bank as many as 73 percent of the demand drafts were fraudulent. Though the authorities are now investigating companies such as Qchex more thoroughly, they point out that anyone with a home computer and printer can similarly commit check fraud too. The check printing companies put the onus on the banks for verifying the draft’s authenticity. Indeed, it would seem the responsibility should lie at their door, but since the cost to reimburse customers for the money stolen is less than what they would pay to hire enough staff to have each check verified, they are playing the odds. A big part of the problem seems to be that many of the fraudulent checks are paid out and never discovered. That is what the criminals are banking on too. [
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